The report comes at a time when insurance officials are saying the industry is still hurting, and that prices for business insurance are generally too low.

The property- casualty industry made $14.7 billion in net profits last year, compared with $10.8 billion in 1990, according to figures released by the Insurance Services Office Inc. and the National Association of Independent Insurers.

The figures are estimates for the industry, based on reports of insurers that account for 96 percent of the nation's property-casualty business.

The $14.7 billion in 1991 is the second- largest profit on record -- second only to $14.9 billion in 1988 -- even though 1991 was the second- worst year ever for claims from natural catastrophes.

But insurance officials and analysts say the 1991 profit comes after two years of declining profits and reflects good investment results, which the industry cannot depend on. Some analysts believe the profits are over-stated, while critics say they're under-stated.

To judge how the industry is doing by looking only at raw profit figures "is always a misuse of numbers" because businesses should be judged by their returns, said Sean Mooney, senior vice president and economist for the Insurance Information Institute. The New York City-based institute does public relations for the industry.

The industry's return on net worth, a measure of profitability used to compare insurers with other businesses, was 9.1 percent last year. That was an improvement over from 8.5 percent in 1990, but still below the average return of 13 percent for Fortune 500 companies in 1990, Mooney said.

Returns in the insurance industry swing up and down, but even over time -- 1974 through 1989 -- the return was 10.8 percent, compared to with 13.4 percent for the Fortune 500, said June Bruce, manager of corporate communications for the Insurance Services

Office Inc.

The profit increase in 1991 did not make up for the declines in profits in 1989 and 1990, Bruce added.

One nationally known consumer advocate didn't sympathize with the explanations.

"It's crocodile tears all the way to the bank," said Robert Hunter, president of the National Insurance Consumer Organization. "They've always got a cloud for every silver lining."

"Thirty-six percent [profit increase] is nothing to sniff at," said Hunter, an actuary. The figure, he noted, doesn't include the $13.8 billion of unrealized capital gains -- growth in the value of investments that insurers continued to hold.

Unrealized gains, however, are reflected in the industry's surplus, or financial cushion, which grew 16.7 percent, to $161.5 billion, at the end of 1991. Surplus is the difference between assets and liabilities.

The $14.7 billion of 1991 profits includes $4.5 billion of net realized capital gains -- gains made by selling off investments such as stocks and bonds. The profits also reflect $35 billion of income such as interest and dividends on investments being held.

The combination of investment income and capital gains was up 10 percent in 1991. Unlike life insurers, property-casualty insurers invest little money in mortgages and real estate, and so aren't suffering the same investment losses.

Property-casualty insurers' profits were also helped by lower claims and claim- handling costs, but the numbers may be misleading, Mooney warned. They may indicate insurers are reducing the reserves they set aside for certain past years' claims, he said.

Insurers are definitely skimping on reserves, and investment results inflated their profit figures, said Myron Picoult, managing director and senior insurance analyst with Oppenheimer & Co. in New York. He calls industry profit and surplus figures "garbage" and says financial maneuvers are making their balance sheets appear better than they are.

"Indeed, for anyone who really believes the reported figures are legit, we can probably arrange a great deal on the Brooklyn Bridge," Picoult said in his recent "Property-Casualty Industry Update" newsletter.

For the fourth quarter of 1991, net profits after taxes were $4.77 billion and included a $10.9 billion net investment gain. In 1990's fourth quarter, profits were $3.1 billion and reflected an $8.9 billion investment gain.

Excluding money made on investments, insurers typically report an underwriting loss -- the financial results based purely on insurance operations.

The underwriting loss shrunk in 1991 to $19.7 billion, from $21.2 billion in 1990